Would you invest your time and at least $10,000 more for a fifth year in college in order to make less after you graduate? This is what accounting students have to do since a new law went into effect January 1, mandating the State of Hawai‘i Board of Accountancy apply the “150 credit hours” educational requirement before allowing anyone to take the Certified Public Accountant (CPA) exam.

The undergraduate accounting degree requires 120 to 124 credit hours at HPU. This means CPA certification will require a fifth year of schooling. It means students incur more loans, lose more time and pay more tuition to satisfy their college education requirements. Many are weighing the costs of staying an extra year in school against the opportunity other business graduates have to begin earning and paying off their college loans.

There are many accounting positions available for students with just four-year accounting degree especially with small and medium size firms. “The starting salary ranges from average of $25,000 to $29,000,” said Lianne Maeda, HPU director of Career Services Center.

Accounting is one of the hardest majors in business school. “Ten years ago, accounting graduates commanded some of the highest starting salaries, typically trailing only some engineering programs. Now accounting graduates are among the lowest paid in the college of business,” said J. Edward Ketz, an associate professor of accounting at the Smeal College of Business at Pennsylvania State University.

Hawai‘i’s largest law firm, Cades Shutte Fleming and Wright, recently hired several HPU computer science graduates at an average starting salary of $45,000 annually. Marsh & McLennan Companies hire first-year insurance associates at the starting salary of $42,000 annually. The Big Five accounting firms at Hawai‘i normally offer $33,000 to $38,000 annually for accounting graduates. Individuals with a master’s degree and/or CPA certification earned five and ten percent more on average. Even with a Master’s degree, accounting graduates still make less than other four-year business graduates. To earn a CPA certificate from the state of Hawai‘i, students need to have “150 credit hours”, and pass all four parts of the CPA exam. Those who have the certificate may choose to apply for the license to practice after they have met the two-year working experience requirements.

This is not the worst. “We’re currently at full capacity in tax compliance for the Honolulu office” said Adele Wong, location leader for Ernst & Young.

For students considering an accounting major, the costs and expenses may outweigh the benefits of a fifth-year education. The number of students majoring in accounting nationwide is declining by about 25 percent according to American Accounting Association research conducted last year. The downward trends will be exacerbated because of the increased credit hours required and by the hiring freeze at the Big Five.

How can accounting students stay competitive? Here are few options. Add another major to be more flexible and broaden career options and opportunities. Use the fifth-year requirement to earn a Master’s degree; the MBA is no longer a luxury but essential in today’s brutal corporate environments.

Combining accounting and finance allow students to gain a better understanding of how financial reporting effects the financial market and to learn analytical skills that can inform better investment decisions in the commerce arenas.

Accounting and justice administration graduates typically find employment in law enforcement agencies such as FBI and CIA by getting involved in investigating money laundering and other white-collar crimes.

Accounting and computer science or management information systems (MIS) graduates often are hired as internal auditors overseas and monitor the increasing e-commerce and to be the programmers developing and modifying accounting software to fit a company’s daily operations.

Using the fifth year to double major, or to get a MBA, will not only allow students to take the CPA exam, but will also push base salaries as high as $50,000 and above in various locations nationwide.

What if you can’t afford the fifth year of schooling? It is important for accounting students to know there are other accounting certifications besides the CPA. Examples are Certified Management Accountant (CMA), Certified in Financial Management (CFM), Certified Internal Auditor (CIA). These certifications focus on different accounting aspects and welcome students taking the exam in their senior year with special student discounts.

There is an old saying “No pain, no gain.” Accounting students just need to be flexible by keeping their options open to opportunities around them and having faith in the profession.

E-mail comments to shawsaw@esife.org.